What is the Depository System?
Your money may be held in the form of liquid cash at your home or may be deposited in a bank. The bank holds your funds in the electronic form and subsequently debits or credits the account. Depending on your issuance of cheques or deposit of cheques. The advantages of safety and convenience of dealing with a Bank overweigh the reasons for holding liquid cash in your home.Your financial assets such as Equity Shares may be compared to the above example.You may hold physical share certificates in your home and be exposed to the various risks of lack of safety, mutilation, loss etc.Alternatively, you may deposit your shares in an organization called a Depository, which holds your shares in the electronic form. The advantages of the Depository System can be further compared with physical shares as below : The risk of loss, mutilation is common for physical certificates and completely removed in electronic shares. Handling of a large number of physical certificates is ended in the Depositor
